CO2 from passenger cars

Passenger cars account for about 12% of all Community CO2 emissions and are
a key contributor to greenhouse gas emissions in the non-ETS sector.

Community's Strategy on CO2/Cars from 1995 established a Community objective
for the fleet average CO2 emissions for new cars sold in the EU of 120g/km in
2012.

Voluntary commitments by industry failed. Need for Community
legislation.

Key elements:

"Volume phase-in": In the period 2012 to 2014, the final compromise
provides that the targets will be applied to 65%, 75% and 80% of a
manufacturer's cars in the years 2012, 2013 and 2014 respectively. This is to
allow manufacturers time to adapt their fleet to the new targets.

Reduced excess emissions premiums: Penalties until 2018 of €5
per gram for the first 1 gram of exceedance, €15 for the second gram of
exceedance, €25 for the third gram of exceedance and €95 for all
subsequent excess emissions. After 2018, all excess emissions would be charged
at €95 per gram.

Eco-innovations: The CO2 emissions benefits of some
automotive technologies cannot currently be measured under the EU's regulatory
test procedures which underpin the Regulation. Until the review of the test
procedure, each manufacturer will be able to discount up to 7g/km from its fleet
average emissions due to such eco-innovations. The discount will be made on the
basis of an application to the Commission and the emissions reductions would
have to be verified. Ultimately the system for recognising eco-innovations will
be replaced by a new revised regulatory test procedure that adequately reflects
real world emissions. A review of the test procedure is due by 2014.

Derogation – niche manufacturers: The Commission proposal
included a derogation for small volume manufacturers (less than 10,000
registered cars per year). An additional derogation for niche manufacturers
(responsible for between 10 000 and 300 000 cars per year) has now been
introduced. Manufacturers under this derogation will be required to reduce their
average fleet emissions by 25% compared to 2007 (or the equivalent for new
entrants)

Flex-fuel vehicles: An additional incentive for flex-fuel vehicles is
included for those vehicles that are capable of running on E85 (a mixture of
petrol with 85% ethanol). This provision only applies to cars registered in
Member States where at least 30% of all filling stations offer E85 and only
applies until the end of 2015.

Ultra-low carbon vehicles: An additional incentive for flex-fuel
vehicles is included in the compromise for very low emitting vehicles. Each
registered vehicle that emits below 50 grams per kilometre of CO2
will obtain "supercredits", i.e. it will be treated as if it were more than one
vehicle for the purpose of calculating a manufacturer's average CO2
level. The multiplier is 3.5 for the years 2012 and 2013, 2.5 in 2014, 1.5 in
2015 and no multiplier from 2016 onwards.

Long term objective for 2020 of 95 grams per kilometre subject to a
review by 2013 of the modalities of reaching it (including the slope of the
limit value curve and the penalty regime).Although many of the
amendments weaken the ambition level of the Commission proposal in the
short-term, the agreement will still introduce binding targets for the sector
and make a significant contribution of about one third to reducing emissions in
the non-ETS sectors.